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GGtii Congress, 

2d Session. 



House Calendar No. HI. 

) HOUSE OF EEPRESENTATIVES. j ReporI 
[ I No. 487. 



IN RE THE DENT ACT. 



Decembkh 10, 1919.— Referred to the House Calendar and ordered to 1 e printed. 



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Mr. Graham of Illinois, from the^^Select Committee on Expenditures 
in the War Department, submitted th(; foUowino; 

REPOKT. 



*(_)n the act of March 2, 1919, commonly known as the Dent Act. 

The act of March 2, 1919, commonly known as the Dent Act, 
provided, in part, as follows: 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That the Secretary of War be, and he is hereby, authorized 
to adjust, pay, or discharge any agreement, express or implied, upcn a fair and etiui- 
table basis that has been entered into, in gocd faith during the present emergency 
and prior to November twelfth, nineteen hundred and eighteen, by any officer or 
agent acting under his authority, direction, or instruction, or that of the President, 
with any person, firm, or corporation for the acquisition of lands, or the use thereof, 
or for damages resulting from notice by the Government of its intention to acquire 
or use said lands, or fofthe production, manufacture, eale, acquisition, or control of 
equipment, materials or supplies, or for services, or for facilities, or other purposes 
connected mth the prosecution of the war, when such agreement has been performed 
in whole or in part, or expenditures have been made or obligations incurred upon 
the faith of the same by any such person, firm, or corporation prior to November 
twelfth, nineteen hundred and eighteen, and such agreement has not been executed 
in the manner prescribed by law: Provided, That in no case shall any award either 
by the Secretary of War, or the Court of Claims include prospective or possible profits 
on any part of the contract beyond the goods and supplies delivered to and accepted 
by the United States and a reasonable remuneration for expenditures and obliga- 
tions or liabilities necessarily incurred in performing or preparing to perform said 
contract or order: Provided further, That this act shall not authorize jjayment to be 
made of any claim presented before June thirtieth, nineteen hundred and nineteen: 
And provided further, That the Secretary of War shall report to Congress at the begin- 
ning of its next session following June thirtieth, nineteen hundred and nineteen, a 
detailed statement showing the^nature, terms, and conditions of every such agree- 
ment and the pavment or adjustment thereof: And provided further, That no settle- 
ment of anv claini arising under any such agreement, shall bar the United States 
Government through any of its duly aiithorized agencies, or any committee of Congress 
hereafter duly appointed, from the right of review of such settlement, nor the right 
of recovery of any money paid by the Government to any party under any settlement 
entered iiito, or pavment made under the provisions of this act, if the Government 
has been defrauded, and the right of recovery in all such cases shall exist against the 
executors, administrators, heirs, successors, and assigns, of any party or parties: 
And provided further, That nothing in this act shall be construed to relieve any officer 
or any agent of the United States from criminal prosecution under the provisions of 
any statute of the United States for any fraud or criminal conduct. 



2 IlSr RE THE DENT ACT. 

By virtue of the {)r()visious of this act, on December 1, at the 
cojivcning of Congress, ttie Secretary of War filed his report in the 
House of Kepresentatives, which report was thereupon referred to 
the Select Committee on Expenditures in the War Department. 
The report is very voluminous, consisting of the report proper and 

3 large volumes and 11 file cases of exhibits. 

From time to time Subcommittee No. 5 on Ordnance has had 
under consideration certain settlements made by the various claims 
boards with claimants under the above-cited act. 

This investigation, as shown by the hearings of said subcommittee, 
has taken a wide range and has been incidental to its general inves- 
tigation of war-orchiancc expenditures. It has included an investi- 
gation of the rules that have been formulated by the War Depart- 
ment for the settlement of such claims and the machinery that has 
been devised. Because of the great expense, time, and labor incident 
to a complete examination of all of said claims, the subcommittee 
has been able to go into only a few of the great mass of claims that 
have been adjusted; all this is incorporated in about 500 printed 
pages of the committee hearings and is too voluminous to be even 
briefed in this report. According to the report of the Secretary of 
War, 4,668 claims have already been adjusted, 2,185 claims are 
pending, and 2,700 other claims are under consideration as to their 
legal standing. 

The subcommittee, among other matters, has made a somewhat 
extensive investigation of the following settlements of war claims 
and contracts, to wit: American Can Co., contract for hard-bread 
cans; Stein-Burn Camp & Field Equipment Co., contract for tireless 
cookers, cooks' chests, and bread boxes; Henry Moss & Co., contract 
for branding irons; Briar Hill Steel Co., contract for corrugated-steel 
roofing; National Enameling & Stamping Co., contracts for boilers 
and kettles; Standard Steel Car Co., contract for nine hundred and 
sixty-four 240-millimeter howitzer carriages; Jones &, Laughlin Co., 
contract for by-product coke ovens. In addition to this, the sub- 
committee has investigated the settlement with the United Metals 
Selling Co. on coj)per, which was a settlement not made under the 
act of March 2, 1910. 

In all these cases except the last two named salvage values were 
fixed by Government agents and Army officers on special facilities 
furnished by the Government, sometimes buildings and sometimes 
machinery and equipment, which were, in the opinion of the com- 
mittee, insufficient and unjust to the Government. In some of the 
cases cited they seem to have been o':)viously taintetl with fraud. 
Part of the blame for this condition is due to the rules ado])ted for 
the settlement of such claims and partly due to the laxness and 
inefficiency of the Government representatives. In the last case 
cited, that of the United Metals Selling Co., immense profits were 
/nade by the ])roducers of copper by virtue of a combination of the 
low-priced copper producers, which combination was aided and en- 
couraged l)y the Government, although in violation of the law of the 
land. 

In some of the cases cited the committee is of the opinion that 
constructive if not actual fraud occurred, vitiating the settlements. 
The committee is of the opinion that millions of dollars are involved 
in these settlements which the Government might have a right to 
recover if a pro]jer review of sacii. settlements were made. 

D* Of ]l« 



IN RE THE DENT ACT. d 

The act of March 2, heretofore cited, has never been tested in the 
_ courts. It is manifest, however, that Congress had in consideration 

w- when the act was passed the probabihty, or at least possibihty, that 

some board or body might desire to review them. The Select Com- 
mittee on Expenditures has been created since the passage of that 
act, but there remains some doubt whether it is such a reviewing 
"committee of Congress" as is intended by the language of such act. 
If it is, it has no right to bring action to recover the moneys now 
owing the Government on said settlements, if any. That duty must 
necessarily devolve upon the War Department, which, in conjunc- 
tioii with the Department of Justice, can institute the proper pro- 
ceedings. 

In view of the filing of the aforesaid report by the Secretary of 
War and the evident intent of Congress to reserve to itself the right 
to review such settlements, this committee is of the opinion that the 
Congress should have promptly such facts as have been developed 
by this committee, together with its observations thereon, so that 
such action may be thereafter taken by Congress or by the proper 
department of the Government as may seem proper. 



MINORITY VIEWS. 

On November 11, 1919, House resolution 381 was reported by the- 
majority of the Select Committee on Expenditures in the War 
Department, being accompanied by Report No. 463. The minority 
are informed that this resolution has been abandoned and that no 
effort is to be made to secure its consideration by the House, but, 
instead, the majority have determined simply to make a report and 
no action upon same by the House is to be requested. 

This report is in the main a restatement of the majority views I 
expressed in Report No. 463, and the minority views as expressed inj 
part 2 of that report constitute the minority view^s upon this. The! 
imputations of fraud against responsible and respectable business 
men and faithful oflicials of the War Department are not justified 
by the evidence taken ])efore the committee, and it is gravely to be 
regretted that the majority have again determined to cast such] 
sinister and unjust reflections in an official report. 

As was pointed out in the minority views on House resolution 381,1 
the matter of salvage values ])resents a question upon which the 
judgment of men will necessarily diiTer, and it must be remembered 
that in accordance with the policy announced to Congress while the 
Dent Act was being considered, and w^hich policy was eminently 
sound and proper, settlements were expedited as rapidly as possible 
consistent with the proper protection of the Government's interests. 
The business world, those who had large sums of capital invested for 
the purpose of filling contracts made while the war was in progress, | 
sought, and had a right to seek, prompt adjustments. 

In hundreds of cases the character of the institutions and factoriesl 
at which these contracts had been filled had been almost completely 
changed by reason of their war contracts. Commercial production 
had been abandoned and every energy and facility had been bent to| 
supplying the war needs of the Republic. The livelihood of unnum- 
bered thousands of laboring men was involved. It v.as of supremestl 
importance to the public w^eal that these institutions might return to 
a peace basis and again enter commercial production, giving em- 
ployment to labor and supplying the peace needs of the country at 
the earliest possible moment. All these elements must be taken into 
consideration in connection with these settlements, and it should be 
remembered that many of them were made in the winter and spring] 
and that conditions have since changed. In fairness, these settle- 
ments must be judged as of the time they were made and not in the! 
light of subsequent developments which it was not possible to fore-j 
cast with accuracy; nor may it be reasonably expected that uni- 
formity and exactitude has been attained in a task involving an] 
almost infinite variety of commodities and calling for a wide range I 
of knowledge and skill in estimating the values involved. 

Finis J. Garrett. 
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